Fidelity Investments has added six new strategies to its list of separately managed accounts. Half of the new SMA strategies focus on fixed income and the other half on equities. The latest releases bring the Fidelity SMA count to 14.
“SMAs are an important offer for us. They have a lot of appeal for investors who look to Fidelity to manage their assets, but do so on a single asset class basis,” said Peter (Skip) Wiemeyer, Fidelity's head of managed solutions. “We have a number of products in most major asset classes today. This latest launch was simply adding a few more strategies to fill some of the gaps in the offering and meet specific customer needs.”
Wiemeyer added that the customization of SMAs is attractive to customers and Fidelity plans continued expansion in the area.
Fixed income SMAs require a minimum investment of $350,000 and invest in limited-duration investment-grade municipal bonds and investment-grade taxable and securitized bonds. They include the Breckinridge Limited Duration Municipal Strategy, the Fidelity Limited Duration Municipal Strategy and the Fidelity Limited Duration Bond Strategy.
New Equity SMAs require a minimum investment of $100,000 for Wealthy SMAs and $5,000 for Digital SMAs. Digital SMAs are part of Fidelity's managed portfolio offering, which is geared toward self-directed as well as lower net worth clients. Investments are managed by Fidelity's dedicated investment managers, but all client interactions with the platform remain digital.
Equity strategies aim to approximate the pre-tax return and risk profiles of the indices they track. They will also include active tax management to improve after-tax returns. They include the Total Market Index, which will be based on the Fidelity US Investable Total Market Index; the Low Volatility Index, based on the Fidelity US Low Volatility Focus Index; and Environment Focus, based on the Fidelity US Large Cap Index. The latter focuses on companies working to reduce their environmental footprint.
A study completed last fall by data analytics and advisory firm Escalent found advisors who surveyed plan to increase their average SMA allocations by eight percentage points to 26% by 2025. Advisors who worked with high-net-worth clients also projected a similar increase, from 23% to 31%.
Survey participants cited low fees, a wide range of investment options and the ability to customize among the reasons they preferred SMAs over model portfolios. Likewise, research firms Cerulli Associates predicts that by the end of 2024, assets under management under SMA will reach $2.2 trillion. Cerulli estimates that assets under management in SMA and unified managed accounts grew by 12% in 2023 compared to the previous year.
As of March, Fidelity managed $175 billion in custom SMA, direct indexing, active equity and fixed income strategies.